GM scraps its plan to thin Cadillac herd to Lexus like Network
03-24-10, 11:51 AM
#1
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GM scraps its plan to thin Cadillac herd to Lexus like Network
http://www.autonews.com/apps/pbcs.dl...IL07/303159939
GM scraps its plan to thin Cadillac herd
Reinstatements pull back from vision of Lexus-like network
Neil Roland
Automotive News -- March 15, 2010 - 12:01 am ET
General Motors Co. has scrapped a plan to reshape its Cadillac dealer network in the image of Lexus.
GM had said it wanted to cut the number of Cadillac franchises by two-thirds -- from 1,422 on Jan. 1, 2009, to about 500 by the end of this year. That plan would have put it in line with import luxury brands, which typically use a few hundred dealerships and focus on coastal urban markets.
Now GM is using dealer reinstatements to rebuild its network of small-town Cadillac dealerships, interviews with dealer lawyers, consultants and advocates showed.
The dealer representatives interviewed by Automotive News said 55 of their 75 clients that are to be reinstated are rejected Cadillac showrooms. The vast majority of those Cadillac dealerships, which were being wound down for closure by October, are in rural areas or small towns, the interviews showed.
"We think that GM realized that terminating these dealers would leave a lot of loyal Cadillac customers orphaned and not produce a material benefit in the form of increased sales," said Ernie Manuel, president of the Fontana Group in Tucson, Ariz., a financial consulting firm for dealerships.
The 922 Cadillac franchises marked for closure in last year's reorganization accounted for nearly half of the 2,000 GM stores affected. Last year GM planned to close 1,350 dealerships and another 650 franchises at dualed stores.
Since GM's bankruptcy last June, the company has been pushing Cadillac sales in large metropolitan areas on the East and West coasts while winding down dealerships in less populated regions, dealer lawyers and consultants said.
That attempted realignment sought to mimic the network distribution of BMW, Lexus and Mercedes-Benz, they said.
"Cadillac definitely appears to be rethinking any portion of their business plan that might have been lifted from the Lexus or BMW playbook," said Scott Watkins, senior consultant at Anderson Economic Group of East Lansing, Mich., a financial consulting firm for dealers.
On March 5, GM started notifying 661 of the 1,160 rejected dealerships that had filed for arbitration that the company intended to reinstate them.
The automaker sent the dealerships letters of intent that were supposed to arrive by Friday, March 12, GM spokeswoman Ryndee Carney said. The letters were to identify requirements such as capital, facility size and floorplan financing that stores had to satisfy to qualify for reinstatement.
Dealers have 10 days to sign and return letters and 60 days more to send paperwork to fulfill the requirements.
'We're excited'
"We're excited and looking forward to getting Cadillac back up here," said a rejected small-town Cadillac dealer, Charles Spadafora Jr. of Indiana, Pa.
Spadafora, 34, said the only thing that could keep him from pursuing reinstatement would be if the letter of intent contained onerous conditions, such as a requirement that he invest millions in his store.
GM wouldn't say how many Cadillac dealerships have been contacted or why such a disproportionate number seem to be Cadillac stores.
"We're not commenting on the specific dealers who are receiving letters of intent nor breaking it down by brand," Carney said.
A clue to GM's thinking might be found in Cadillac sales figures. Since the company's June 2009 bankruptcy, Cadillac's monthly sales have fallen 15 percent compared with the same period a year before, according to the Automotive News Data Center.
That's roughly twice as much as the 7 percent decline in Buick sales during the same period and the 8 percent slide in Chevrolet sales. It's comparable to GMC's 16 percent plunge.
"It doesn't take a rocket scientist to understand," said Ron Coleman, a dealer lawyer in Tacoma, Wash. "It wasn't costing GM a lot of money to have dealers in small markets sell Cadillacs."
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz0j7aPwoGh
GM scraps its plan to thin Cadillac herd
Reinstatements pull back from vision of Lexus-like network
Neil Roland
Automotive News -- March 15, 2010 - 12:01 am ET
General Motors Co. has scrapped a plan to reshape its Cadillac dealer network in the image of Lexus.
GM had said it wanted to cut the number of Cadillac franchises by two-thirds -- from 1,422 on Jan. 1, 2009, to about 500 by the end of this year. That plan would have put it in line with import luxury brands, which typically use a few hundred dealerships and focus on coastal urban markets.
Now GM is using dealer reinstatements to rebuild its network of small-town Cadillac dealerships, interviews with dealer lawyers, consultants and advocates showed.
The dealer representatives interviewed by Automotive News said 55 of their 75 clients that are to be reinstated are rejected Cadillac showrooms. The vast majority of those Cadillac dealerships, which were being wound down for closure by October, are in rural areas or small towns, the interviews showed.
"We think that GM realized that terminating these dealers would leave a lot of loyal Cadillac customers orphaned and not produce a material benefit in the form of increased sales," said Ernie Manuel, president of the Fontana Group in Tucson, Ariz., a financial consulting firm for dealerships.
The 922 Cadillac franchises marked for closure in last year's reorganization accounted for nearly half of the 2,000 GM stores affected. Last year GM planned to close 1,350 dealerships and another 650 franchises at dualed stores.
Since GM's bankruptcy last June, the company has been pushing Cadillac sales in large metropolitan areas on the East and West coasts while winding down dealerships in less populated regions, dealer lawyers and consultants said.
That attempted realignment sought to mimic the network distribution of BMW, Lexus and Mercedes-Benz, they said.
"Cadillac definitely appears to be rethinking any portion of their business plan that might have been lifted from the Lexus or BMW playbook," said Scott Watkins, senior consultant at Anderson Economic Group of East Lansing, Mich., a financial consulting firm for dealers.
On March 5, GM started notifying 661 of the 1,160 rejected dealerships that had filed for arbitration that the company intended to reinstate them.
The automaker sent the dealerships letters of intent that were supposed to arrive by Friday, March 12, GM spokeswoman Ryndee Carney said. The letters were to identify requirements such as capital, facility size and floorplan financing that stores had to satisfy to qualify for reinstatement.
Dealers have 10 days to sign and return letters and 60 days more to send paperwork to fulfill the requirements.
'We're excited'
"We're excited and looking forward to getting Cadillac back up here," said a rejected small-town Cadillac dealer, Charles Spadafora Jr. of Indiana, Pa.
Spadafora, 34, said the only thing that could keep him from pursuing reinstatement would be if the letter of intent contained onerous conditions, such as a requirement that he invest millions in his store.
GM wouldn't say how many Cadillac dealerships have been contacted or why such a disproportionate number seem to be Cadillac stores.
"We're not commenting on the specific dealers who are receiving letters of intent nor breaking it down by brand," Carney said.
A clue to GM's thinking might be found in Cadillac sales figures. Since the company's June 2009 bankruptcy, Cadillac's monthly sales have fallen 15 percent compared with the same period a year before, according to the Automotive News Data Center.
That's roughly twice as much as the 7 percent decline in Buick sales during the same period and the 8 percent slide in Chevrolet sales. It's comparable to GMC's 16 percent plunge.
"It doesn't take a rocket scientist to understand," said Ron Coleman, a dealer lawyer in Tacoma, Wash. "It wasn't costing GM a lot of money to have dealers in small markets sell Cadillacs."
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz0j7aPwoGh
03-24-10, 12:46 PM
#3
Hey! Caddilac is one hit model away from being considered elite so watch out. Caddi and Lincoln will step their games up in the next couple of years so we may have some intense competition very soon. Lexus needs a bad *** GS(F) to push back the bullies.
03-24-10, 01:05 PM
#5
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DTS
CTS
XLR (still being sold discontinued)
SRX
Escalade
G
M
QX
EX
FX
It matters GREATLY how many dealerships you have. One of Lexus best business points is its dealership model. You have to keep dealerships happy and profitable, they are selling your product.
Caddy has WAY to many dealers to be 4th in sales and not close to first. They have to cut those numbers down. Caddy is usually tops in incentive offerings, which is not good business for dealers.
FYI GM dealers make no money on car sales. They make it on parts/service.
03-24-10, 05:36 PM
#7
Lexus Fanatic
I'm not sure why they want to ignore the Midwest and concentrate on East/West Coast dealerships. Cadillac gets a LOT of its sales in the traditionally American-nameplate-friendly Midwest/Great Lakes area. In states like WI, OH, MI, IL, IN, and MN, the DTS/DeVille and STS have been especially popular with older people....the CTS tends to be more popular on the coasts. That's why I also have some misgivings about Cadillac replacing both the DTS and STS with a single, all-new sedan, little details of which is known about at this time.
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03-24-10, 05:40 PM
#8
Lexus Fanatic
It doesn't make sense if poor quality drives away customers....that's what happened in the 1980s and 1990s. Yet there are still come Cadillac die-hards......see my post just above. And today's Cadillacs ARE somewhat better in quality, to some extent....but still not up to the better Japanese makes.
03-24-10, 05:57 PM
#9
marshal, I agree with you to some extent that they had some issue's in the 80's and 90's, chiefly the 4-6-8, early Northstars and Allante's failure, but they've improved greatly. The northstar is now IMO a fantastic engine, and many will agree on that. I STRONGLY agree with you on your DTS/STS point BTW.
Cadillac has strong, appealing designing and models available. They're the only auto maker I can think of that makes a truly cushy senior citizen cruiser (DTS) to a mean sportscar (CTS-V). I honestly believe they've had some great designs for the past 20 or so years as well.
There's also something about Cadillac that makes them different from every other luxury brand. I'm not sure if it's whether they are inherently American, or that they represent 100+ years of ingenuity, or that they have scored the slogan "The Cadillac of...", but there is something definitively different about Cadillac that I haven't found in any other luxury brand...including Lexus.
I'm happy to see that they are keeping more dealerships open. Not only because it will allow for great market share, but because when I need some complicated, specific work done on my Cadillac it's getting harder and harder to find competent GM trained Cadillac mechanics familiar with 4th Gen Seville's.
Cadillac has strong, appealing designing and models available. They're the only auto maker I can think of that makes a truly cushy senior citizen cruiser (DTS) to a mean sportscar (CTS-V). I honestly believe they've had some great designs for the past 20 or so years as well.
There's also something about Cadillac that makes them different from every other luxury brand. I'm not sure if it's whether they are inherently American, or that they represent 100+ years of ingenuity, or that they have scored the slogan "The Cadillac of...", but there is something definitively different about Cadillac that I haven't found in any other luxury brand...including Lexus.
I'm happy to see that they are keeping more dealerships open. Not only because it will allow for great market share, but because when I need some complicated, specific work done on my Cadillac it's getting harder and harder to find competent GM trained Cadillac mechanics familiar with 4th Gen Seville's.
03-24-10, 07:43 PM
#10
While I think some of the dealers should come back, our local GMC Cadillac dealer received a closing letter and I won't miss them. I've dealt with them for over 10 years and have watched their sales business practices go downhill. I bought a 99 Sierra and it was great experience. The 04 Denali wasn't quite as smooth. Since then, I've seen more high-pressure sales and game playing on deals. They are still open, but with very few cars and sales people. The Buick dealer down the street is now selling GMC and their good sales persons left for another Cadillac dealer about 12 miles away.
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